"The worst has passed" for the licensor of silicon intellectual property (SIP) primarily for the handsets, mobile broadband, portable and consumer electronics markets, analysts said.
Reviewing the smartphone market, Oppenheimer argues two things relevant to CEVA. First, analysts cite primary growth area in low-to-midend handsets in developing markets as a boon to the company.
Second, due to hyper-competitive pressures emerging in 2015, analysts believe original equipment manufacturers will look for ways to drive down costs without compromising quality.
"To this end, CEVA sits primed to take advantage of both. First, CEVA's primary customers Spreadtrum Communications Inc. (SPRD) and Leadcore Inc. serve the fastest growing markets. Second, we see Samsung Electronics Co. (SSNLF) and MediaTek Inc. as opportunities as they work to streamline their product offerings, ultimately using CEVA's technology more than in the past," analysts said.
Separately, TheStreet Ratings team rates CEVA INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate CEVA INC (CEVA) a HOLD. The primary factors that have impacted our rating are mixed--some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and increase in net income. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and relatively poor performance when compared with the S&P 500 during the past year."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 18.4%. Since the same quarter one year prior, revenues rose by 40.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- CEVA has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 5.43, which clearly demonstrates the ability to cover short-term cash needs.
- CEVA INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CEVA INC reported lower earnings of $0.31 versus $0.58 in the prior year. This year, the market expects an improvement in earnings ($0.34 versus $0.31).
- In its most recent trading session, CEVA has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry, implying reduced upside potential.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, CEVA INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: CEVA Ratings Report